Strong demand and low supply keep rentals tight
Perth's vacancy rate, despite rising in the June 2023 quarter, remains among the lowest in the country, according to the latest data from the Real Estate Institute of Australia.
While Sydney, Brisbane, Adelaide, Perth, and Canberra saw slight improvements in their vacancy rates, Hobart and Darwin recorded stronger increases, and Melbourne experienced a decrease.
Cath Hart, CEO of the Real Estate Institute of Western Australia, attributed Perth's high vacancy rate to strong demand and low levels of supply. Although the vacancy rate rose by 0.1 percentage points in the June quarter, Hart anticipates it will tighten further throughout the year.
“There were some signs the rental market was improving during the quarter, but those green shoots didn’t bear fruit,” Hart said. “While members are reporting a lot of activity from Eastern States investors and builders are reporting increasing completions, supply can’t keep up with demand. Historically, rental listings decline towards Christmas. When you combine this with WA’s strong population growth, we can expect the vacancy rate to decline again."
In terms of rental prices, Perth saw a significant increase in the median weekly rent for three-bedroom houses, rising by 6.8% to $550. This increase was the highest among all capital cities, with Sydney following closely behind at 4.8%. The median rent for other dwellings also rose by 1% to $500 per week. Annually, Perth experienced the largest increases in median weekly rent for houses, rising by 19.6%, and for other dwellings, rising by 16.3%.
During the June quarter, the median rent for houses increased across all Perth areas, including Perth Inner, Perth Middle, and Perth Outer. Regional areas such as Bunbury, Broome, and Albany also saw an increase in median rent for houses, REIWA reported. This trend continued annually, with all metropolitan and regional areas experiencing an increase in median rent for houses.
Furthermore, the median sale prices in Perth showed positive growth. The median price for three-bedroom houses increased by 2.3% to $575,000 in the June 2023 quarter, and the median price for other dwellings decreased by 1.3% to $395,000. Hart attributed the strong demand for established homes to population growth, rising costs, and delays in the building industry, which subsequently fueled price growth.
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“We’re seeing homes sell in record times, which highlights the demand for established property,” she said. “Market conditions indicate this will continue and we can expect more price growth over the year.”
Sydney, Adelaide, and Perth experienced the highest median house price growth over the quarter, while Melbourne and Canberra saw declines, REIWA reported. Adelaide had the most growth in median price for other dwellings, while Hobart had the largest decrease.
Despite the increase in prices, Perth remains one of the most affordable capital cities based on median house prices and the proportion of income needed to meet mortgage payments. Over the quarter, the median sale house price increased in Perth Middle and Perth Outer but decreased in Perth Inner. In regional WA, prices increased in Bunbury and Broome but decreased in Albany. Annually, Perth Middle and Perth Outer saw increases in median house prices, while Perth Inner experienced a decline. Among regional areas, Bunbury and Albany recorded increases in median house prices, while Broome saw a decline.
When it comes to median two-bedroom dwelling sale prices, Perth Middle and Perth Outer experienced increases over the quarter, whereas Perth Inner saw a decrease, REIWA reported. In regional WA, Bunbury and Broome witnessed increases, while Albany saw a decline. Over the past year, Perth Middle and Perth Outer saw increases, while Perth Inner experienced a decline. In regional areas, Bunbury recorded an increase, while Albany and Broome saw declines in median prices for other dwellings.
Under current market conditions, it is expected that prices will continue to increase throughout 2023.
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